Meliá’s demand is strong and margins are stable: Buy (T.P. 6,19 euros/share)

MeliáMeliá expects to beat 2019 figures this Christmas

Bankinter | We foresee strong demand with stable margins, at levels close to those of 2019, despite the global economic slowdown.

Main supports: (i) Higher cost of energy will favour the demand for resorts in the Canary Islands, during the autumn and winter; ii) Events and conference activity is starting up again; iii) Nearly 30% of revenues come from North American clients, where the economy and consumption look more solid.

From a financial point of view, Meliá has the capacity to meet its debt maturities, at least until 2024. Whatsmore, it could sell or mortgage assets. Although we are maintaining our estimates, we are lowering our target price by 20% to 6,19 euros/share, penalised by a larger discount rate derived from the strong uptick in sovereign bond yields. Even so, Meliá offers a revaluation potential of 25%. For that reason, we are maintaining our Buy stance.

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